Boosting Transparency and Accountability in the Charity Sector
Annual Conference of the Charity Law Association of Australia, Melbourne
Thursday, 27 July 2023
In the 2023-24 Budget, we announced funding to enable increased disclosure of the Australian Charities and Not-for-profits Commission’s regulatory activities to enhance transparency and accountability in the charity sector.
Today I will speak about the motivations behind this measure and look to provide additional details on the underlying reforms.
The ACNC takes potential misconduct in the charity sector very seriously, and investigates where necessary. In 2021–22 the ACNC finalised 96 investigations, which resulted in a range of outcomes, including the revocation of 15 charities’ registration for serious and ongoing non-compliance.
However, secrecy provisions currently prevent the ACNC from disclosing whether it is investigating alleged misconduct by a charity, the outcomes of investigations, and/or the reasons for revoking the registration of a charity.
This limits the ability of the public and charities to learn from ACNC regulatory activities, and adversely impacts public trust and confidence in the sector and in the ACNC as an effective regulator.
Recently the ACNC was able to publicly disclose an investigation into allegations around misconduct by the Hillsong Church, which was crucial to sustaining public confidence in the ACNC as an effective regulator. However, the ACNC was only able to make this disclosure because of Hillsong’s consent. In most cases, the ACNC is unable to communicate its actions, which impacts trust and confidence.
The 2018 ACNC Legislation Review identified the ACNC secrecy provisions as overly restrictive and have recommended reforms to enable increased disclosures from the ACNC.
A 2021 consultation with the charity sector also revealed support for increased disclosures given the educational benefits and the potential to lift public trust and confidence in a sector that relies heavily on donors and philanthropists to support its activities.
As part of the Budget measure, we will amend the ACNC Act to promote greater transparency and accountability within the sector, whilst balancing potential reputation risks to charities and the need to ensure personal and confidential information is handled appropriately.
The ACNC Act will be amended to expand the ACNC Commissioner’s ability to publicly disclose information about the ACNC’s regulatory activities in three areas. The Commissioner will be able to disclose:
- information about the existence of an ongoing investigation into a charity where disclosure is necessary to prevent public harm;
- finalised compliance investigations that did not result in formal compliance action, where disclosure is in the public interest; and
- summary reasons for revocation of a charity’s registration.
The ACNC will also begin to publish de-identified reasons for decisions to accept or refuse applications for registration of charities where these are of educational benefit to the charity sector.
The new disclosures possible under these reforms will have wide-ranging educational benefits for the sector. The reforms will also allow the ACNC to assure the sector and donors that it is acting on issues of public concern, strengthening compliance and boosting public confidence that charities are doing the right thing.
The new regime would allow the ACNC to disclose its final actions where there was benefit to the public, and announce new or ongoing investigations where necessary to prevent public harm. This would strengthen confidence in the ACNC and help the sector to understand its obligations.
To ensure that we strike the right balance between improving transparency and affording charities due process, we will consult broadly on all changes to legislation.
The Budget funding provided to the ACNC will also help to ensure that disclosures are legally accurate and potential reputational risks to the sector and the ACNC are managed effectively, whilst maximising educational benefits to the sector.
By increasing public trust and confidence in charities and the ACNC, this reform will help to ensure donors and philanthropists continue to support for the sector. This will contribute to our objective of doubling philanthropic giving by 2030.